The European Monetary Union as a commitment device for new EU member states

Arbeitspapier

This paper shows that the credibility gain from permanently committing to a fixed exchange rate by joining the European Monetary Union can outweigh the loss from giving up independent monetary policy. When the central bank enjoys only limited credibility a pegged exchange rate regime yields a lower loss compared to an inflation targeting policy, even if this policy ranking would be reversed in a fullcredibility environment. There exists an initial stock of credibility that must be achieved for a policy-maker to adopt inflation targeting over a strict exchange rate targeting regime. Full credibility is not a precondition, but exposure to foreign and financial shocks and high steady state inflation make joining the EMU relatively more attractive for a given level of credibility. The theoretical results are consistent with empirical evidence we provide on the relationship between credibility and monetary regimes using a Bank of England survey of 81 central banks.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: ECB Working Paper ; No. 516

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Monetary Policy ; Price Level; Inflation; Deflation ; International Economic Order and Integration ; Open Economy Macroeconomics
• Thema: Credibilty ; Exchange Rate Regimes ; inflation targeting ; monetary policy ; open economy ; Eurozone ; Inflationssteuerung ; Geldpolitik ; Glaubwürdigkeit ; Offene Volkswirtschaft ; Wechselkurssystem ; EU-Mitgliedschaft

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Ravenna, Federico
• Ereignis: Veröffentlichung
• (wer): European Central Bank (ECB)
• (wo): Frankfurt a. M.
• (wann): 2005

Weitere Informationen

• Handle: http://hdl.handle.net/10419/152950
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ